The Micro-Dynamics of the Militia Economy

Can the militia economy in Lebanon be captured in its specific dimensions? Before analyzing four of its major characteristics, I will first offer a quantitative, though necessarily cautious, overview of the scale and composition of the impact of the militias on Lebanon’s economy. The need for caution is not hard to understand, given the poor quality of the available data. Indeed, estimates of the total economic impact of the war differ considerably, ranging from $150 million to $1.5 billion per year, depending on the period in question—whether one focuses on relatively peaceful years or on those in which major battles took place—and whether calculations take only direct military costs into account or include broader economic effects as well. Even zeroing in on direct militia expenditures, however, does little to improve one’s confidence in available data. For example, Roger Dib, the Lebanese Forces’ second in command, announced in 1989 that the cost of his militia’s equipment and salaries amounted to $40 million per year.^[18] The cost in arms, ammunition, and salaries of the “liberation war” waged by General ‘Aoun from March to July 1989 is estimated to be $1 billion.

It is even more interesting to break down the military and civilian resources of the militias, which have been estimated to have amounted to approximately $2 billion per year.^[19] Half of this sum was alleged to have come from nonmilitia sources, either from patron states or from individuals or institutions belonging to the same community. By opening “embassies” in countries to which Lebanese had emigrated (in western Europe, the Americas, West Africa), militias tapped into diaspora resources that had previously been channeled into Lebanon through personal and family networks. Because the militias were the producers of economic insecurity and criminality, only they were able to guarantee emigrants access to their assets, whether in the form of bank deposits or fixed assets such as land or real estate. As for the militias’ patron states (virtually every state in the region funded one armed group or another), they spent some $700 million per year to secure the superiority of their various local allies. After the war, Israel disclosed that it had given $25 million per year in subsidies between 1976 and 1982 to the Lebanese Forces. In addition, the looting of regular armed forces, including international monitoring groups, was a primary source of weapons for all the militias. The United Nations Truce Supervision Organization (UNTSO) estimated that it lost nearly $500 million between 1975 and 1978 as a result of looting, including what was lost at the hands of Palestinians.^[20] Similarly, the storage facilities of the Lebanese army were looted on many occasions: between March 1976 and February 1977, when the Lebanese Arab Army units withdrew from the Lebanese Army; in 1984, when three of six operational brigades seceded after having been incited to do so by ’Amal and the PSP; and finally in October of 1989, when there was a division between two legal armies, those of Generals ‘Aoun and Lahoud.

When it comes to the economic functioning of the militias, it is more useful to identify their specific modalities rather than to assess their overall resources as distinct from the global economy that they literally cannibalized. Four specific modalities stand out. First is the capture by militias of state functions for private gain. Second is the collapse of the state’s monopoly over the legitimate use of force and the privatization of public security functions. Third is the criminalization of the Lebanese economy as militias increasingly expanded their activities in the economic domain. And fourth is the role of the militias in financial speculation.

The militia economy rested above all on the capture and appropriation of state functions. While the state administration was ever less capable of collecting land and real estate taxes and trading dues, or of exacting payment for the provision of electricity and water, armed groups enjoyed two strategic advantages in undertaking such tasks: their power to intimidate and their control over territory. Even if the services offered by the militias were of inferior quality compared to those provided by the public offices and ministries, society’s dependence on them was greater. This dependence even took on totalitarian overtones when the most ordinary activities, such as going to movies or restaurants, using public transportation, traveling to other countries or, more simply, passing through a roadblock, became grounds for the exercise of control and the exaction of payment.^[21]

The dramatic proliferation of ports offers a telling example of this phenomenon. Indeed, the expansion of militia-controlled ports during the war did not simply reflect the central administration’s decline as a regulator of trade but also signaled the privatization of the country’s maritime relations. The fifteen piers or so that sprang up were not accessible to average citizens who wanted to engage in trade or travel. The use of these piers was, instead, contingent on membership in the community networks of the militias that each controlled specific port facilities. And, as in other economic domains, the interweaving of financial interests and political tactics led to paradoxical decisions in the management of these facilities. Between 1985 and 1987, for example, a few hundred Palestinian fighters were clandestinely brought into the country through the Jounieh port—then controlled by the Christian and anti-Palestinian Lebanese Forces—to return to West Beirut to participate in the war of the camps against the Shi‘ite militia, ’Amal. While the political objective of the LF in helping their enemy was to weaken their rival, it also generated a financial profit that was far from trivial.

The erosion of legal control over the militias’ economic activities unfolded in a series of steps. Militias exploited breakdowns in communication occasioned by the fighting to justify their increasing economic autonomy. They permitted what little remained of official functions to subsist for a time, but simultaneously compelled the ever less viable public administration to acknowledge and eventually legalize criminal practices that were linked to the provision of essential economic services. The import of crude oil for the Tripoli and Zahrani refineries and the import of oil derivatives for the Dora reservoir escaped state monopoly as early as 1976, when the Ministry of Energy began to tolerate the emergence of private importation. State bureaucrats tolerated, for instance, an overland import network with which the Syrian president’s brother was associated, as well as a seaborne import network that operated via Greece and Bulgaria. Still, the state oil monopoly continued to grant import licenses. More important, the Caisse des Carburants (the Fund for Fuel), whose accounting books disappeared after a battle in 1977, subsidized oil products until 1986 even while militias were collecting taxes from consumers and illegally reexporting oil to neighboring countries.^[22] To make up for the subsequent shortage of oil, the government accepted the de facto deregulation of petroleum trade, causing the number of importers to rise from five before the war to several dozen by the middle of the 1980s. Finally, during the last months of the war, the Conseil supérieur des douanes (the Higher Council of Customs) granted official status to the dozens of private oil terminals that had been established along the coast. Although this recognition allowed the government to tax fuel once again, it also legalized the transformation of a state monopoly into a nonstate oligopoly consisting of five or six holding companies of importers—a situation that has become consolidated since the end of the war.

The case of tobacco is both less complicated and more telling, since it was the state agency itself that negotiated the terms according to which its monopoly was to be dismantled. The Régie de tabac, Lebanon’s state tobacco monopoly, which at one time imported two thirds of local consumption and oversaw the marketing of South Lebanon’s tobacco crop, was no longer able to suppress massive smuggling despite pitched battles between the Forces de sécurité intérieure (FSI, the state police) and smugglers in 1977 and again in 1983. In September 1987, the government signed an agreement with the six leading militias (the Lebanese Forces, the Progressive Socialist Party, ’Amal, the Marada Brigade, the Popular Nasserist Organization from Sidon, and the South Lebanon Army), whereby it granted them the right to sell cigarettes in their respective territories. The agreement produced an 8 percent increase in the price of tobacco, which went to the militias who had committed themselves to confiscating “contraband” cigarettes in the areas they controlled.^[23] Yet, as in the case of oil, it would be a mistake to assume that the coerced appropriation of public resources implied the formation of alternative public services. In the two most developed cases of a militia economy, the Jumblatt’s PSP in the Chouf and the Lebanese Forces, revenues were more than ten times greater than investment and social expenditures.^[24] Such predatory structures are far from the kind of state modernity discussed by Tilly, who assumes that redistribution and legitimacy are linked.

Second, the shift from the state’s monopoly over the legitimate use of force to unbridled private violence gave rise to a demand for security that the militias avidly exploited. As the army and state police withdrew from the provision of security, urban populations very quickly established agreements with fighters—a practice in the tradition of the khuwa.^[25] Contrary to common representations, the main source of danger to populations other than unpredictable events such as car bombs or air raids did not come from enemy territory—since frontiers had been drawn between the militias’ respective areas of control by the fall of 1976. Instead, the danger came from within, from the routine exercise of intimidation and criminality by the very people who represented themselves as providers of security. In this environment, the private provision of public order was a booming business. Security and armored transport companies proliferated, as did firms manufacturing and selling electric and electronic material and martial arts clubs run by paramilitary men. Not incidentally, these kinds of activities also served as a safety valve against unemployment, mirroring the role of public enterprises in many countries throughout the Middle East. Some 20 percent of the salaried employees in the cement works of Chekka were “protector-guards,” according to local terminology. At the Khaldeh airport in the southern suburb of Beirut, the number of people close to ’Amal who were holding security-related jobs was estimated to be around five hundred, and it has not decreased much in the ten years since the war ended. The privatization of public order did more than generate profitable businesses that would remain in place after the end of war. It also kept social groups from constructing their collective security through shared norms or through public and enforceable rules. Instead, it promoted aggressive self-defense and the proliferation of weapons.

The third type of economic activity that the militias performed is also the most interesting because it locates militia activities at the intersection of the political and military realms, on the one hand, and sheer criminality, on the other. Indeed, militias did not simply take advantage of their physical domination in order to extract resources. They also invoked the needs of the population in the areas they controlled, and used established businesses and criminal networks to carry out their activities. Thus, by hijacking goods transported by their own regular companies, they were able to require an insurance premium on these goods while selling them to consumers at higher prices on the black market. In another case, the installation of a telephone switchboard by a militia in Zahleh that bypassed the public network’s paralyzed lines, or the installation of pipes that made it possible to “hijack” the equivalent of a twenty-ton fuel tanker per week for five years from the refinery in Tripoli.^[26] Between such activities and straightforward criminal endeavors motivated purely by profit there was a fine line. This line was swiftly crossed with the unregulated traffic in toxic waste from Italy, which has been circulating within Lebanon since 1987 with complete disregard for the humanitarian consequences. The development of drug-related activities including the production, extraction, and commercialization of hashish and heroin illustrates the distortions of an economy that fulfilled immediate financial needs by involving various social groups without, however, taking their long-term interests into account. The area used for growing hashish doubled between 1976 and 1984, and did so again in 1988. Likewise, the area where poppy fields were cultivated increased from 60 to 3,000 hectares between 1984, when poppy cultivation was introduced by Kurdish experts under the protection of the Syrian army, and 1988. As a result, drugs gave rise to a sudden and ostentatious prosperity in the Hermel and the Beka‘a and peasants abandoned the production of food crops in these areas.^[27] The severe reduction of poppy cultivation in these areas, which was imposed by Syria starting in 1990 at the request of the U.S. Drug Enforcement Agency, produced a long-term economic crisis. Whether Christian or Muslim, many peasants from the hinterland chose to leave rather than to revert to the unprofitable cultivation of cereals or face competition from Syrian imports of vegetables and fruits. Meanwhile, neither the reconstructed Lebanese administration nor the international community was able to come up with a rescue plan.

As for drug production, transport, and commercial networks protected by militia members, their net profit was immeasurable.^[28] Drugs were, in some respects, a direct response of militias to the extraordinary financial demands of war making, yet their sale also provided for massive capital accumulation among militia leaders, riches whose full scale will never be fully known. Perhaps most important, however, the interruption of poppy production around 1990 did not cause the death of the networks feeding upon the external production zones and bank circuits of northern countries; far from it. The dismantling of the militia organizations that gave rise to and protected local drug networks was followed by their long-term integration into international drug marketing circuits.

The fourth type of economic activity that constituted the militia economy was the militias’ involvement in financial speculation. This activity actually grew out of the need to launder drug money through means other than real estate operations, but was fueled by the increasing volatility of the Lebanese pound. Until 1982, the impressive stability of the pound helped the militias purchase all kinds of goods outside the country. Following the decline of oil prices in 1984 and the depletion of the state’s foreign exchange reserves from which the militias benefited, however, this tendency was brutally reversed. The fiscal crisis was such that in 1985 the value of the Lebanese pound dropped by 30 percent per month: $1 was worth 2 £L in 1975, 50 in 1985, 500 in 1987, 1,500 in 1990 and 2,000 in 1992. Many Lebanese and others speculated on the currency’s devaluation, but militia leaders had a definite advantage at this game. They obtained fictitious bank guarantees for their loans, insisted on using short-term deposits to obtain long-term credits, and exerted pressure on the Société financière du Liban, the official body responsible for allocating liquid assets among banks, to appropriate available foreign exchange. Moreover, certain banking institutions were created solely for managing the finances of militias, including the Prosperity Bank of Lebanon, which was linked to the Lebanese Forces. The protection of profits was also facilitated by the presence of big Western banks in Lebanon.^[29]

On the whole, the relation of the militias to the Lebanese state remained ambiguous. This ambiguity dismisses the oversimplifying thesis analyzing the militias’ onslaught against the state as part of a large plot aimed at dismantling the Near Eastern states (Syria, Lebanon, and possibly Jordan) to the benefit of communitarian statelets. Such a plot, depicted as an Israeli scheme, as the ultimate goal of extremist Lebanese Christians, as well as the secret vow of the Syrian ‘Alawite minority, could never be implemented during fifteen years of war, even if several militia groups, among them the Lebanese Forces and the Druze PSP, envisioned at some stage being able to do without the Lebanese state and to create their own set of institutions, including a central bank and foreign relations department.

What the dynamic of the militia economy shows, on the contrary, is the complexity of the relationship between the state and the militia entrepreneurs. The state, with its central administration, its national institutions, and its sovereignty, remained an asset and a stake. The militia took greater advantage from their complementarity to the state economy than in its destruction and replacement. Even while despised, weakened, and delegitimized by the militias which concurred in its destruction, it was still their common good, as witnessed during the “reconciliation meetings” of Geneva (November 1983) and Lausanne (March 1984), when the warlords summoned by their Syrian “patron” competed in “national loyalty.” Finally, by denying each other the right to secede or to take hold of state power the militias acted collectively as the warrant of the perenniality of the state.